Credit Flow and Liquidity for MSMEs: Here is a List of Initiatives Taken by Government

The Government of India has implemented a series of targeted initiatives to enhance credit access and improve liquidity for Micro, Small, and Medium Enterprises (MSMEs). These measures aim to provide financial support, reduce credit costs, and ensure timely settlements. In this article, we have curated key initiatives:

Credit Guarantee Scheme (CGS) for MSEs

To strengthen the Credit Guarantee Scheme (CGS) for Micro and Small Enterprises (MSEs), the Ministry of MSME infused an additional ₹9,000 crore into the Credit Guarantee Fund Trust for MSEs (CGTMSE). This step is expected to unlock ₹2 lakh crore in additional credit at lower interest rates.

• Increased Guarantee Ceiling: Effective from April 1, 2025, the guarantee limit has been raised from ₹5 crore to ₹10 crore.
• Expanded Coverage: Loans under CGS now enjoy up to 90% guarantee coverage across various categories.

Prime Minister’s Employment Generation Programme (PMEGP)

The PMEGP provides financial assistance in the form of Margin Money Subsidy of up to 35% for establishing new micro enterprises in the non-farm sector:

• For Manufacturing Enterprises: Project cost up to ₹50 lakh.
• For Service Enterprises: Project cost up to ₹20 lakh.

PM Vishwakarma Scheme

Launched on September 17, 2023, PM Vishwakarma aims to support artisans and craftspeople from 18 traditional trades through an integrated support package:

• Loan Provision: Loans up to ₹3 lakh.
• Interest Subvention: 8% reduction in interest rates to make credit more affordable.

Self-Reliant India (SRI) Fund

To help scalable MSMEs become large enterprises, the Self-Reliant India (SRI) Fund has been established:

• Total Corpus: ₹50,000 crore.
• Funding Mix: ₹10,000 crore from the Government of India and ₹40,000 crore from private equity/venture capital funds.

SAMADHAAN and ODR Portals

• SAMADHAAN Portal: Launched on October 30, 2017, to monitor outstanding dues to MSEs and facilitate resolution through 161 Micro & Small Enterprises Facilitation Councils (MSEFCs) established across States and UTs.
• Online Dispute Resolution (ODR) Portal: Introduced on June 27, 2025, offering a fully digitised platform to resolve delayed payment cases efficiently.

Trade Receivables Discounting System (TReDS)

To enhance liquidity by enabling financing of MSMEs’ trade receivables, the RBI has established guidelines for TReDS, which enables MSMEs to receive early payments from corporate and government bodies via multiple financiers.

• Platform Operators: 5 entities are currently managing TReDS operations.
• Lowered Threshold: Corporate and CPSEs onboarding threshold reduced to ₹250 crore in turnover (Notification dated November 7, 2024).

Unified Lending Interface (ULI)

RBI has introduced the Unified Lending Interface (ULI) to simplify and accelerate MSME lending:

• Simplified Process: Reduces documentation and eliminates the need for individual integration with data providers.
• Faster Approvals: Empowers lenders to make quicker, informed loan decisions while reducing operational costs.

Also Read: New RBI Rules for Co-Lending from Jan 2026

Conclusion

These comprehensive reforms reflect the government’s sustained commitment to bolstering MSMEs, which are a vital pillar of India’s economic growth and employment generation.

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